Equitas Small Finance Bank IPO opens tomorrow. Things to Know

Equitas Small Finance Bank, the subsidiary of Equitas Holdings is set to open its initial public offering (IPO) for bidding on Tuesday, October 20, and will close on Thursday, October 22. The IPO is the first in October after September saw the launch of as many as 8 IPOs. Post the IPO, the stake of Equitas Holdings Limited will decline to about 82 percent from 95.49 percent earlier. The shares are expected to list on BSE and NSE on October 30. Originally, the company had planned a Rs 1,000 crore issue which has now been reduced to half.

"We are reasonably comfortable on our capital adequacy ratio, so didn't need to raise as much capital. I believe we have adequate growth capital for the short term. Given the current macro environment, we thought it would be prudent to reduce the issue size," PN Vasudevan, CEO, Equitas Small Finance Bank said.Analysts are divided on whether investors should subscribe to Equitas Small Finance Bank’s (SFB) Rs 518 crore initial public offer (IPO) that kicks off on Tuesday.

The price band for the issue is fixed at Rs 32-33 per share, and the issue closed on Thursday. The offer from the unit of Equitas Holdings will comprise a fresh issue of shares worth Rs 280 crore, and an offer for sale of 7,20,00,000 shares by the parent company.

Equitas Small Finance Bank (SFB) is the largest SFB i ..

Equitas Small Finance Bank IPO Market Lot:

IPO Open:	20 October 2020
IPO Close:	22 October 2020
IPO Size:	₹280 Crore (Approx)
Face Value:	₹10
Price Band:	₹34 - ₹35 Per Share
Listing on:	NSE & BSE
Retail Portion:	35%
Equity:	72,000,000 Shares ( As Per News)
Employee Discount:	NA

Lot Size:	Minimum 428 Shares & Maximum 5564 Shares
Minimum Amount:	₹14,980
Maximum Amount:	₹1,94,740

Here are the key things to before subscribing to the issue:

1) Objective: The IPO is mainly to meet the RBI’s regulatory norms that require the banking subsidiary to be listed within three years of commencement of operations which was September 2019 and to reduce promoter stake to 40 percent within five years, which will be by September 2021. As per the regulations, the promoter holdings have to be reduced to 30 percent in 10 years (by September 2026) and to 26 percent in 12 years—by September 2028.

"Our deadline to go public was September 2019 as per RBI rules, which we missed. We missed the September 19 deadline for listing because we were trying to get a regulatory nod for a scheme of arrangement which SEBI rejected. Listing was further delayed due to the pandemic," Vasudevan explained.

2) Price Band: Equitas Small Finance Bank has fixed the issue price in the price band of Rs 32-Rs 33 per share.

3) Minimum Bid: Applicants can bid for a minimum one lot of 450 equity shares and in multiples of 450 equity shares, extending up to 13 lots.

4) Book Managers: The lead managers of the for the initial public offer are Edelweiss Financial Services, IIFL Securities and JM Financial Consultants, while KFintech Private Limited is the registrar to the issue.

5) Issue Size: The public issue consists a fresh issue of Rs 280 crore (8.5 crore shares) and an offer for sale of 7.2 crore equity shares by Equitas Holdings (valued at Rs 237.6 crore at the upper price band), taking the total issue size to Rs 517.6 crore.

6) Reservation: The offer includes a reservation of Rs 51 crore worth of shares for eligible shareholders of Equitas Holdings and Rs 1 crore shares for eligible employees of Equitas Small Finance Bank. The eligible shareholders mean those individuals and HUFs who are the public equity shareholders of EHL (excluding such persons who are not eligible to invest in the offer under applicable laws or are otherwise unable to make any such investment) as on the date of the red herring prospectus i.e. October 11, 2020, the company’s filing said.

7) Background: Equitas Small Finance Bank was incorporated in Chennai on June 21, 1993. Their asset products include small business loans, housing loans, and agriculture loans, Vehicle Loans, MSE Loan etc. On the liability side, they offer current accounts, salary accounts, savings accounts, and a variety of deposit accounts to their clients.

Equitas SFB was the largest SFB in India in terms of a number of banking outlets, and the second-largest SFB in India in terms of assets under management and total deposits in Fiscal 2019, as per the CRISIL report.